NHAI Launches Green Bonds for Sustainable Highways
The National Highways Authority of India (NHAI) is taking a significant step towards environmental sustainability. Its fully owned Special Purpose Vehicle (SPV), DME Development Limited (DMEDL), plans to issue green bonds to fund eco-friendly initiatives on the Delhi-Mumbai Expressway project. This initiative underscores NHAI’s commitment to promoting green highways and sustainable development. The green bond issue is set to be the first of its kind in the Roads and Highways sector in India, with an expected launch in December 2024.
Green Bonds: A New Initiative
The green bond issue will be conducted under a closed bidding system. The total size of the issue will reach up to Rs. 1,000 Crores, with a base issue size of Rs. 500 Crores. Additionally, there will be a green-shoe option to retain oversubscription up to Rs. 500 Crores. This innovative financing method aims to attract investments specifically for environmentally friendly projects. The bonds will comply with the Government of India’s sovereign green bonds framework, international protocols, and guidelines set by the Securities and Exchange Board of India (SEBI).
The funds raised through these green bonds will be allocated to various sustainable activities. These include avenue and median plantation, the construction of animal underpasses, and the establishment of natural stormwater drainage systems. Furthermore, the initiative will support renewable energy streetlights, waste recycling, and rainwater harvesting. By focusing on these areas, NHAI aims to create a greener and more sustainable infrastructure.
Commitment to Environmental Sustainability
NHAI Chairman, Shri Santosh Kumar Yadav, emphasized the importance of this initiative. He stated, “This initiative is a part of our vision to create greener National Highways and reiterates NHAI’s commitment towards environmental sustainability.” The issuance of green bonds is expected to encourage investments in eco-friendly projects, particularly in the Roads and Highways sector. This approach not only aims to reduce energy consumption but also seeks to lower the environmental impact of vehicular emissions.
The green bonds will play a crucial role in enhancing DMEDL’s financial performance. They will help reduce the overall cost of borrowings and diversify the investor base by attracting those focused on Environmental, Social, and Governance (ESG) criteria. To ensure transparency and credibility, DMEDL has appointed Care Edge Analytics as the Third-Party Reviewer (TPR) to identify and certify the green activities associated with the project.
DME Development Limited: A Brief Overview
Incorporated in August 2020, DME Development Limited is a wholly owned SPV of NHAI. Its primary purpose is to finance, construct, and operate the Delhi-Mumbai Greenfield Expressway. The company has received AAA ratings from CRISIL, CARE, and India Ratings, reflecting its strong financial standing. DMEDL aims to raise approximately Rs. 48,000 Crores from banks and financial markets through loans and bonds. So far, it has successfully raised around Rs. 42,000 Crores for the implementation of the Delhi-Mumbai Expressway project.
This ambitious project not only aims to improve connectivity between two major cities but also focuses on sustainable development. By integrating green initiatives into its framework, DMEDL is setting a precedent for future infrastructure projects in India. The issuance of green bonds is a significant milestone in this journey, showcasing a commitment to environmental responsibility while enhancing economic growth.
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